7 April 2026
The correlation problem nobody wants to talk about
Ask most investment managers what their portfolio does in a severe drawdown, and they'll give you a historical answer. Ask what it does if equities and bonds fall simultaneously, as they did in 2022, as they have done at other points in history, and the answer gets more complicated.
The problem isn't bad portfolio construction. It's that most frameworks are built on correlation assumptions that hold in normal regimes but can break under stress, precisely when they matter most.
2022 was a live demonstration. Balanced portfolios designed to smooth volatility didn't. Clients who expected protection didn't get it. And advisers were left explaining why a diversified portfolio had fallen across the board.
The lesson isn't to abandon traditional allocation. It's to recognise that asset class labels don't guarantee behaviour. And that genuine diversification, the kind that holds under stress, requires something more than splitting a portfolio between equities and bonds.
Outcome-defined exposure: a different kind of diversification
Most diversification is assumption-based. You hold assets that have historically behaved differently, and you trust that correlation will stay low enough to matter when it counts.
Structured products work differently. The diversification is built into the payoff design itself.
A typical autocall structure defines, in advance, how the investment behaves across a range of market scenarios. If markets rise or hold, a defined return is delivered. If markets fall but stay above the barrier, capital is returned in full. If markets fall significantly and breach the barrier, capital is at risk.
The behaviour isn't a product of market correlation. It's a product of contract design. That's a qualitatively different form of resilience, and it's why structured products increasingly feature in sophisticated portfolio frameworks as a complementary allocation rather than an alternative bet.
What the data actually shows
This isn't theoretical comfort. It's evidenced across thousands of real-world outcomes.
Since 2009, across 1,755 plans and through Brexit, a pandemic, and the sharpest rate cycle in a generation, not one Walker Crips structured product has failed to return client capital. (Source: Walker Crips Structured Investments, January 2026)
Where structured products fit your clients' portfolios
Most advisers aren't running portfolios day-to-day. They're making recommendations, matching clients to solutions that fit their objectives, risk profile, and time horizon, and trusting that those solutions hold up when markets don't behave.
That's precisely where structured products deserve a place in the conversation.
For a client approaching retirement, where a sharp drawdown at the wrong moment can permanently alter their income trajectory, a defined-outcome investment offers something a model portfolio or discretionary fund management (“DFM”) mandate often can't: known outcomes across market scenarios, which allow for greater clarity when planning.
For a client already drawing income, sequencing risk isn't a theoretical concern. A structured allocation within their portfolio can absorb market stress without forcing sales from a depleted equity position.
This isn't about adding a layer of complexity to a recommendation. It's about having a more precise tool available when the standard options don't quite fit.
The governance piece
Firms using structured products thoughtfully aren't treating them as opportunistic add-ons. They're integrating them with the same governance discipline as any other allocation: defined counterparty limits, documented suitability criteria, formalised panel selection and review.
The quality of that process is what separates advisers who use defined-outcome products well from those who don't. And it's increasingly a differentiator in how investment propositions are reviewed and compared.
The question worth asking
The diversification frameworks that served clients well for thirty years are being stress-tested. Some are holding. Some are showing cracks.
The advisers who will navigate this best aren't necessarily those with the most complex portfolios. They're the ones asking the clearest questions about what their allocations actually do under pressure, and whether the risk their clients are carrying is the risk they intended them to carry.
If you're reviewing your investment proposition and want to explore how defined-outcome exposure could complement your existing approach, whether within a DFM mandate, alongside model portfolios, or as a structured sleeve for specific client segments, I'd welcome a conversation. Please contact me on 020 3100 8157 or [email protected].
Joe Simpson
Director, Investment Management
Structured products are capital-at-risk investments and are not suitable for every client. Past performance is not a reliable indicator of future results. This article is for professional advisers only and does not constitute advice.
The value of any investment can go down as well as up, and you may get back less than you invest. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority (FRN: 226344).
Important Note
No news or research content is a recommendation to deal. It is important to remember that the value of investments and the income from them can go down as well as up, so you could get back less than you invest. If you have any doubts about the suitability of any investment for your circumstances, you should contact your financial advisor.
The value of investments can fall as well as rise. Investors may get back less than invested. Past performance is not a reliable indicator of future results.
The value of investments can fall as well as rise. Investors may get back less than invested.
